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Choquelimpie
 
'[1]' etc, refers to footnotes, that can be found at the end of the article.
 
To read a more technical account of the Choquelimpie deposit, click here.
 
Introduction

Choquelimpie was the highest gold and silver mine in the world. The ore deposit is located in northern Chile at an elevation of over 4,800 metres above sea level, as high as Mont Blanc, Europe’s highest mountain. It was a significant gold producer from about 1984 to 1992 and continues to attract interest to the present day.

 

Choquelimpie is not far distant from the legendary mines of El Cerro Rico de Potosi, discovered in 1545 by Spanish Conquistadores and destined to become the most important silver mines in the world. The nearby town of Potosi grew into the biggest city in the Americas and provided immense wealth for the Spanish Empire. Silver from Potosi was transported by llamas to the coast at Arica (now in northern Chile). Most of the llama caravans stopped over at the settlement of Putre, where grazing was available for the animals, and rest for those who accompanied the pack trains, at an elevation of about 3,500 meters above sea level. Putre is the nearest town to Choquelimpie.

 

It has been said that some production of silver took place at Choquelimpie as early as 1545 [1], and 1643 is another date mentioned. The earliest documentation relating to mining is for the period 1883 to 1908 when an English company, ‘The Arica Mining Company’, owned title at the deposits and worked a series of narrow veins by underground developments in areas peripheral to the main hill. Steam pumps were utilized to drain the considerable quantities of water present and steam hoists allowed mechanisation of extraction from levels as much as 80 m below the lowest adit level. At the San Antonio adit enough ore was mined to provoke a surface collapse crater that came to be known as ‘Hundimiento’ (‘Cave-In’). The mines were inactive in the 1930s and 1940s but interest revived in 1951 when the silver price rose. Attempts were made to re-work the old mine dumps from 1970 to 1973 when Enami (‘Empresa Nacional de Mineria’), and others built an 80 tonne per day flotation plant, but the venture was unsuccessful and was soon abandoned. Sporadic interest in the silver potential of the property resurfaced from time to time, for example by the Hochschild Group from 1974-76, but when the price of gold began to increase in 1972 it was this metal that came to prominence.

 

In 1979, Promel acquired title to Choquelimpie and began treating the sulphide-rich dumps in a 50 tpd flotation plant located in Arica. As gold prices continued to rise, to a peak of more than US$800 per oz in 1980, Promel started to run out of suitable dump material and, based on data left by the Hochschild Group, began investigating oxide mineralisation in breccias near the summit of Cerro Choquelimpie. Gold and silver grades were attractive and Promel established a heap leach cyanidation plant in about 1983 at Pucara, some 35 km west of the mine.

Although Promel did an excellent job of putting Choquelimpie into production they operated in a rather haphazard way, making only rudimentary efforts to evaluate the total ore reserve and to plan for an efficient mining and processing operation. Billiton International Metals, part of the Shell oil group, was based in The Hague but operated locally through Shell Chile. It was interested in the potential for gold production in Chile and recognized that it might be possible to develop Choquelimpie in a more rational way as a well-capitalised state-of-the-art mine.

 

Choquelimpie was the most significant exploration project I was involved in, and the only one I was able to accompany through the process of transformation to a producing and profitable mine. This is the story, a personal story, of the events of exploration and commissioning of the mine through Shell Chile, as I experienced them.

 

1984

In July 1984 Dr. Chris Pointon, then Exploration Manager for Billiton in Chile, sent Arturo Thomas, a geological consultant with two company geologists, Vicente Irrarrazaval and Waldo Cuadra, to examine a number of epithermal precious metal prospects in the far north of Chile. They found out that a group of Arica-based businessmen were producing gold and silver from ore being trucked down from a small mine near to the Bolivian border at a location called Choquelimpie. They attempted to visit the mine but were denied permission. However they did have the presence of mind to collect a sample that had, literally, ‘fallen off the back of a lorry’ transporting the ore to Pucara. The sample assayed 3.4 g/t of gold and 82 g/t silver. Chris Pointon was able to make a brief visit to the property towards the end of the year, liked what he saw, and thereafter set about negotiating better access with a view to evaluating the potential of the deposit as a business opportunity for Billiton.

An ‘epithermal’ precious metal prospect may contain economically recoverable amounts of gold and silver in a mineral system formed by the operation of hot fluids, such as mineral springs and geysers, generated close to the earth’s surface in the dying phases of volcanic activity. Sometimes the deposits occur in narrow veins, sometimes in the matrix of bodies of porous or brecciated rock. It was the surge in gold prices from US$35 per ounce to over US$ 800 per ounce during the inflationary times of the 1970s that sparked interest in epithermal mineralisation, but technical advances in mining and metallurgy were equally important. Many of the technical advances were made at the Carlin, and nearby, gold mines in Nevada, USA.

 

Five partners made up Promel; Marcos Beovic, Alberto Koch, Natalio and Leonardo Fosk and David Fux. The leading partner was Marcus Beovic, a mining engineer of the old school (‘everything is possible’) who had learned his trade at El Cerro Rico de Potosi.

 

1985

I arrived in Chile on 26th April 1985, to take over as Exploration Manager for Billiton, based at Shell Chile in Santiago, from Chris Pointon who was destined for The Hague. As it happened, the long awaited visit to Choquelimpie had been authorised by Promel for the 3rd to the 6th May, and as I was to take part I had only a few days in Santiago. Chris was unable to go, but I was accompanied by Dr. Richard (Dick) Sillitoe, and Waldo Cuadra. Dick was a vastly experienced consultant with whom I had worked previously and Waldo an excellent Chilean geologist employed by Shell Chile. From Arica we drove to the hydroelectric power station at Chapiquina, where there was a guest house in which we could stay for the first night. Choquelimpie was at an elevation of over 4,800 metres above sea level, and as I was not acclimatized to the thin air at such an altitude I was prepared for some discomfort. However Chapiquina is at an elevation of only about 3,000 metres which at least promised the prospect of getting a reasonable night’s sleep.

 

The dirt road from Chapiquina rose to an elevated plateau – the Altiplano – at 4,000 metres. Crossing it, we forded the River Lauca and headed towards Choquelimpie, a partially eroded volcanic edifice about 7 million years old. Even from a distance a pale prominence could be seen within the centre of the old volcanic cone, and this turned out to mark the site of the underground mine workings and the mineralised breccia bodies that Promel was exploiting. The ore was trucked across the Altiplano, pretty much the way we had come, to the heap-leach cyanidation plant where gold and silver were extracted. The plant, at Pucara, was about 3,000 metres above sea level and situated near the main road from Arica to Putre.

 

In 1985 Putre was the capital of the Province of Tarapaca, in Chile’s First Region. The road from Arica passed via Putre before continuing to the black lake of Chungara and into Bolivia, passing between the ice-covered volcanic peak of Sajama to the north and those of Parinacota and Pomerape to the south. It was a truly beautiful region.

 

Dick, Waldo and I set about collecting fifty-five substantial representative rock-chip samples from the mineralised area and making a geological appraisal. As anticipated, I found the going very hard because of altitude sickness – to climb five metres up the steep slopes needed a major effort. We passed the night – one cannot say slept – in old buildings that remained from the earlier mining, pretty much in the shadow of the steel, concrete and corrugated iron structure of the old Enami plant.

 

The gold and silver values in the samples were encouraging and I was able to put together a report entitled ‘The Choquelimpie Opportunity’ dated September 6th. This indicated the potential for a target of 8 million tonnes of ore grading 3.5 g/t gold and 184 g/t silver, suggested a mechanism by which Billiton could acquire the property from Promel via a series of option payments, and presented a work programme and budget to collect the information on which to base decisions. The contribution of Dick Sillitoe was crucial to the sampling programme and the evaluation.

 

The proposal for involvement at Choquelimpie arrived at Billiton’s head office in The Hague at a time when sentiment was extremely negative. In spite of large amounts of money that had been spent in more than twenty countries, prospects were poor – the main exception being, perhaps, the Collahuasi copper project, also in northern Chile, where, however, progress was very slow. But Collahuasi was a longer-term venture (ultimately to prove extremely important), whereas Choquelimpie offered immediate excitement.

 

Epithermal precious metal deposits were attracting attention world-wide at the time, so a proposal for involvement in a good project in Chile could hope for a favourable reception. Billiton authorised me to sign a letter of intent with Promel, done on October 31st, and to negotiate an option agreement. After hard bargaining a contract was signed with them on December 27th. This stipulated an immediate payment of US$200,000, a second payment after six months of the same amount, a third payment after one year of US$600,000, US$1.2 million after two years and US$2.8 million after three years. Shell Chile could drop out or purchase the property at any time up to the fourth anniversary for US$15 millions.

 

The agreement also stipulated that Promel could continue mining up to 800 tonnes per day of oxide ore and up to 600 tonnes per day of sulphide ore during the option period.

 

The option terms were quite onerous, but they were the best that could be obtained, particularly because we were in competition with proposals from other companies, notably Freeport International. The initial, 6-month and one-year payments were pretty much inevitable if the project was to continue, but it was our objective to collect enough information to justify exercising the option and buying the property before the two-year payment of US$ 1.2 million fell due, or to reach a decision to abandon it. This meant that time was always going to be of the essence.

 

Another vital consideration was the damage that Promel was doing to the ore deposit on a daily basis by mining 800 tonnes per day of oxide ore; we did not believe that they would continue mining sulphide ore (from Hundimiento), which was less lucrative, and so it turned out. Clearly we needed to do two things to limit the damage. First, we needed to maintain complete secrecy as to where the best gold and silver values lay – Promel did not have detailed knowledge of grade distribution in the deposit. They would obviously take the highest grade ore they could find, and this clearly ran the risk of ripping the heart out of the deposit and leaving insufficient for us to justify exercising the option. Second, we needed to be able to demonstrate that the amount of oxide ore Promel was taking was within the 800 tonnes per day limit agreed. To do this we had to compile a database of the number or trucks leaving site each day (or night!) and have a way to determine the tonnage each was carrying. There was no reason to think Promel would be dishonest, but there was clearly a temptation to bend the rules. If, for example, they were unable to move 800 tonnes one day, perhaps because of unavailability of ore at the mine, or due to bad weather, they might be tempted to ‘make up’ the shortfall by running over 800 tonnes the next day to ‘compensate’. There was a danger that a game of cat and mouse might develop, causing friction between the parties, so we appointed Cesmec, an independent company, to monitor and record all movement of ore out of the mine. This did not entirely avoid difficulties.

 

Billiton was founded in 1860 by Dutch interests in the Dutch East Indies (now Indonesia) to mine tin. It was acquired by Shell in 1970 at a time when Shell was generating more cash from its oil-based businesses than it was able to effectively deploy. It believed that minerals, like oil a resource extracted from the earth, would allow it to capitalize on its expertise and thus generate profitable business opportunities. In Billiton it felt it had found a company that would fit in well with its Anglo-Dutch management style.

 

During the 1970s political problems in the Middle East and rising monetary inflation led to sudden increases in the price of oil, and the cash flow of major oil companies simply ballooned.Other oil companies copied Shell and bought mining companies, reasoning that they could bring ‘synergies’ to bear in mining. By the early 1980s BP, Amoco, Esso and Chevron had become substantial miners.

I had spent two years, from 1982 to 1984, working out of Billiton’s head office in The Hague and my experience there led me to the conclusion that in reality Shell did not properly understand mining. Mineral deposits take longer to develop than oil or gas, and the output often requires more marketing than hydrocarbons. Cash flow in mining is much smaller and slower than is the case of oil or gas, and lead times from discovery to first production are usually much longer. The Shell management structure was a cumbersome bureaucracy, perhaps necessary in a vast oil business, with both a vertical structure (from London and The Hague down) but also a horizontal structure (with a number of countries grouped into Regions), but unsuited to the free-wheeling nature of minerals exploration.

 

The Choquelimpie exploration programme became something of a victim of this clash of business cultures. I had to mobilize a group to a remote location under challenging physical conditions and working to financial deadlines that would become critical. When I requested personnel, Shell Chile’s Human Resources Department was unable to respond adequately. I could identify competent staff immediately, and they were happy to work on temporary contracts. Shell Chile, however, wanted to insist on permanent contracts and lengthy formal selection procedures. Worse, instead of understanding the needs of the project, the human resources manager seemed to resent the urgency I was expressing and appeared determined to do what he could to slow things down. I believe that the underlying problem was the mining/oil business clash, but I also suspect that the human resources manager had long resented the way foreign geologists had appeared in Shell Chile, seemed to enjoy huge amounts of freedom, and had access to apparently easy money. In any case, it became incredibly stressful.

 

1986

In the first days of 1986 we began mobilization from Santiago to 4,860 meters above sea level and over a distance of 1,800 kms. Although it was summer in Chile, in fact Choquelimpie comes under the influence of the ‘Bolivian' or ‘Altiplano’ winter at that time of year, a period subject to snow, rain, mist and wind, and therefore also mud. It was my job to oversee everything from Santiago, planning, contracts for jobs to be carried out on site, information flow, care of visitors (of whom there were soon quite a few) and ensuring that Waldo Cuadra had what he needed up at the project. As project geologist it was Waldo’s job to organize everything in Arica and at Choquelimpie, particularly implementation of the programme, supervision of the geologists and other workers, and management of contractors on site. By the end of January we had rented an office in Arica, placed three caravans on site to serve as temporary accommodation, surveyed a grid over the deposits, appointed Cesmec to monitor Promel’s production, and begun tender processes for analytical services, for bulldozing drill-roads and for a drilling contract.

 

By the end of February, in spite of the difficulties with the Human Resources Department in Santiago, we had contracted three geologists for the project, Roberto Freraut, Osvaldo Ponce and Alejandro Faunes; Glen Burns joined later and Javier Riquelme, our surveyor, was also a crucial member of the team. The geologists immediately began mapping and sampling the area, based initially in the three small caravans. Shell Chile did not want to contract local workers but we managed to get round this by appealing to David Turner, the President of Shell Chile, after which a special type of temporary contract ‘the Choquelimpie contract’ was developed. This allowed us to take on about thirty men to start rebuilding the old mining camp and help in the large amount of fieldwork that was underway. March saw the start of bulldozing, a drill contract agreed with an experienced drilling company called HSB, and locations selected for the first twelve drill holes. By then over 350 rock samples had been collected. It was also in March that we had Jozsef Ambrus, a very experienced Chilean consulting geologist, on site to advise us on how best to develop the programme. By the end of April, with the weather beginning to improve, we had obtained analytical results from over 400 samples, and begun drilling.

The type of drilling used was what is called ‘reverse-circulation’. A very large truck-mounted percussion drill hammered down into the rock, blasting the broken rock chips and dust back up the drill rods in a current of air to a cyclone where the solids were separated out and collected into sample bags. Given the rarefied atmosphere at 4,860 metres above sea level, the compressors on the drill rig needed to be very powerful and provided with turbo air feed. Building roads and platforms adequate to accommodate such a large, heavy vehicle, and the attending supporting truck to carry the necessary supply of drill rods and other paraphernalia, was a considerable challenge, especially so because we were drilling onto the side and top of a substantial hillside. We referred to the holes as ‘reverse circulation holes’, designated ‘RCH’ for short. The samples were handled carefully to avoid contamination and small representative portions of them were separated and sent for analysis to specialized precision laboratories. The succession of samples, in metre intervals down the hole, allowed us to evaluate the geology and estimate the grades of gold and silver from surface down into the deposit.

Mapping, bulldozing and drilling continued so that by the end of June we were able to estimate resources of 5 million tonnes containing 2.28 grams per tonne of gold and 69 grams per tonne of silver. Of great concern to us was that Promel had discovered a high-grade zone in the deposit and begun mining it! We wondered if they had somehow gained access to our analytical data, but never found any evidence that they had.

An event that was to prove important for Choquelimpie was the appointment early in March of David Whitehead as head of exploration in The Hague. He was much more experienced in mineral exploration than the previous incumbent and was able to provide a great deal of support as it became evident that our project had considerable merit. David was able to think ahead about the likely future needs of Choquelimpie and coordinate support in Billiton’s head office. Thus it was that early in June Jules Perkins, a minerals processing engineer, was sent from The Hague to inspect the test facilities in Chile, visit Choquelimpie and initiate a programme of mineral characterization at a laboratory in Santiago. At first, Jules seemed sceptical about the feasibility of developing a sound mineralogical programme within the time constraints that prevailed, but visits to the high-quality test facilities available in Santiago, talks with competent local specialists, and some pep-talking from the project team got him solidly 'on board'. Less welcome was that the positive results we were obtaining and the lure of a ‘far away place with a strange sounding name’ in an exciting location conspired to induce others, who could wangle a visit, to impose themselves on us. Ostensibly they were contributing to the project. In reality some of them were no more than a distraction, taking our time and attention away from the job in hand.

 

Once full results of the second drilling campaign were received by the end of August we were able to increase the reserve estimate to a possible 8.668 million tonnes at 2.37 grams per tonne gold and 69 grams per tonne silver, including 2.168 million tonnes of sulphide ore at 2.07 grams per tonne gold and 11 grams per tonne silver. This was assuming a gold-equivalent cut-off grade (i.e. counting silver as gold at a suitable conversion ratio) of 1.5 grams per tonne. By then we had also collected sixteen metallurgical samples, carried out check assays at three separate laboratories, made detailed topographic maps and were ready for the third drill campaign. The geologists had begun mapping and sampling peripheral areas and were turning their attention to the possibility of finding other precious metal prospects in the region.

 

Shell Chile’s activity in the First Region, at both Choquelimpie and Collahuasi, was starting to attract attention and at this time Shell Chile’s amiable head of Public Relations, Flavio Traverso, made a briefing visit to the Governor, Brigadier General Gaston Frei; this was still the time of the military government of Augusto Pinochet. About this time too, David Whitehead first visited, met Promel, and inspected their facilities at Pucara, and our activities at Choquelimpie.

 

The main progress in September was a good advance in the third drilling campaign and the start of mineralogical and metallurgical work, including bottle and column leaching tests, at the laboratories of CIMM in Santiago. On site, the old Promel camp was refurbished, a 10,000 litre fuel tank was installed and sample preparation facilities were set up in the old flotation mill. A programme of bulk-sampling was approved for the following month and Shell Chile submitted applications for water rights. At the end of October Shell Chile was authorised from Shell’s head office in London to fast-track Choquelimpie, subject to the approval of Mr. Van Engleshoven, the Group Managing Director, which was duly given.

 

During October the Choquelimpie project began to take on a different feel, partly as a result of the decision to fast-track. Enrique Carretero, a minerals processing engineer employed elsewhere in Shell Chile, was transferred to Metals Division to supervise the Chilean laboratory sample testing, and David Laing, a Mining Engineer with Chilean connections, was assigned to the project in The Hague. A local mining consultancy, NCL, was contracted to start compiling cost data on personnel, engineering, procurement and construction management services available in Chile.

 

Billiton had started to consider the possibility of taking a partner, or partners, into the project for technical and/or financial reasons, so initial contacts were made with two mining companies, Freeport and Rayrock, while Shell Chile’s finance manager, Eugen Marshall, spoke to the foreign banks operating in Chile, most of whom were keen to carry out debt for equity swaps. Eugen and I enjoyed pleasant lunches with personnel from Chase Bank, Manufacturers Hanover Trust (‘Manny Hanny with the Funny Money’), American Express and, later, Citibank!

 

On site, we were planning a series of inclined diamond drill holes, to recover solid rock samples from the deposit, and had started blasting a number of pits on the sites of some of our percussion drill holes, to test the correlation of gold and silver grades from the drill holes with larger samples and to obtain material for the next phase of metallurgical testing. Other activities included having Javier Riquelme tie the local topographic grid to the national grid, the testing of mineral samples for density to improve the accuracy of the reserve estimate, and compilation of a computerized database of geology and grades for the deposit. We had also begun to investigate the area for possible ore-processing sites and planned to install a meteorological station.

Work continued apace in November. The results of the third drill campaign were received and added to the geological and topographic data being fed into the computerised model of the deposit. Bulk sampling was completed from eight pits, each six metres deep, and samples were being prepared for analysis. In Santiago a detailed mineralogical study using conventional and electron microscopes was completed and a series of laboratory-scale cyanide leach tests in bottles and columns were either completed or in progress. A hugely experienced American cyanide leach expert, Dr. George Potter, was contracted to advise us on a detailed on-site leaching test programme that would lead to plant design and costing. This was to include a pilot heap leach test using ore from the test pits. Dr. Potter and Enrique Carretero visited the site towards the end of the month.

In Santiago NCL delivered costings for equipment, consumables and personnel, and Shell Chile set up its own economic model and started to examine the possibility for early exercise of the option. Authorisation was requested from The Hague for the US$600,000 option payment due on December 27th.Various other activities relating to mineral title verification, water rights and operating permits were carried out. A successful visit by a senior Shell manager, Howard Birtwhistle (head of the Western Region), David Turner and Burt Devere (an experienced American geologist who was in charge of the Shell/Billiton interest in the Collahuasi copper project) took place on November 7th. Burt added to the project’s momentum by reporting positively.

 

In December the Bolivian winter once again set in, affecting the work that needed to be done on site. Crushing of the pit samples was interrupted when the main bearing of the jaw crusher broke, but little time was lost because of the swift action of Pilar Oyarzun, our excellent Mineral Titles lawyer. At my request she purchased a new jaw crusher, of Chinese manufacture, at a trade fair in Santiago and had it shipped express to Choquelimpie. Curiously, the bureaucrats of Shell Chile in Santiago considered it inappropriate that a lawyer should be involved in such an activity and used the event as an excuse to prise her away from Metals Division some months later; as far as I was concerned it was a marvellous example of magnificent teamwork that exemplified the spirit of the project. There were those who said that other people wanted to boss Pilar around, because she was smart and attractive, but in any case she soon moved on to work in private practice![2]

 

A geological report of the area was compiled by Waldo and his staff, and geological and block models of the deposits were delivered by Jozsef Ambrus, who then went on to carry out a computerized analysis using GEOSTAT and GEOPLOT software developed by RTZ Consultants. The reserves at this point were estimated as 7.07 million tonnes of oxide ore with average grades of gold and silver respectively of 2.52 and 97 grams per tonne, to a 1 gram per tonne cut-off.

 

The last units of the old camp were received from Promel and refurbished to cope with the increasing number of workers at the mine. A wooden metallurgical test laboratory was erected and a laboratory building was constructed on site, centrifuges were installed, bottle-roll equipment was built, fourteen columns and an agglomerator drum were purchased, a 12 metre conveyor was built, and two metallurgical technicians were contracted. Construction of a pilot heap for test cyanide leaching of the ore was delayed by the rain, but studies of the metallurgy at Promel’s Pucara plant and further test work at Cesmec in Santiago continued.

Although the River Lauca, with substantial flow, was situated only about twelve kilometres from Choquelimpie, extraction of water from it was not permitted. This was because it flowed into Bolivia and a disagreement over use of the river had almost led to military action between Bolivia and Chile some years earlier. The border between the two countries was said to be mined (and not for gold or silver either!). However, in December an agreement was reached with local landowners to explore for underground water and a visit was arranged with a consulting hydrologist for January 1987. In the meantime the meteorological station was erected on site to collect information about, among other things, the degree of icing that might occur as dilute cyanide solution was sprayed from nozzles onto the tops of the planned heaps of crushed ore.

 

Back in Santiago a preliminary open pit model with ore scheduling was in progress by NCL. Shell Chile further developed its economic model of the project using a hurdle rate of 15% net present value. On the corporate front, additional technical visits were received on site, from Placer, Lac Minerals and Citibank, and Freeport booked a visit for the following month. American Express and Citibank sent senior financial representatives to Santiago to study the data and Rothschild provided information for a gold loan of up to 30,000 ounces as part of a prospective financing package. A 1987 programme and budget proposal for US$2.16 million was sent to Billiton in The Hague, incorporating the preparation of a feasibility study for the end of June.

 

1987

Travel from Santiago was by air to a good airport at Arica, on the coast. From there a good tarred road led inland up the valley of the River Lluta, a green irrigated ribbon snaking between completely dry hills of the Atacama dessert, marked only by occasional petroglyphs. After about forty kilometres the road suddenly turned up the south flank of the valley, starting a steep climb towards Putre and the Altiplano. The asphalt ended after seventy five kilometres.

 

The easiest route up from Arica to Choquelimpie took the international road up to the Altiplano near Las Cuevas, before cutting across towards the mine. However, the shorter and more usual route led towards the Chapiquina hydroelectric power station, but turned away and zig-zagged up to the plateau above. As this road was quicker, it was the one we always used, and so did the laden trucks sent down by Promel from the mine. Provided the driver was sensible, the road, to geologists and other field personnel used to the dirt roads of Chile, was not considered dangerous, although the drops from it were sometimes very great.

 

On January 6th. 1987 news reached me in Santiago that a pickup truck driven by our driver/buyer, Raul Lopez, and carrying our Arica office manager, Jaime Rojo, had left this road and plunged down a ravine, killing both occupants. Raul was a relative of Roberto Freraut, one of the project geologists. I travelled to the scene of the accident the next day and took part in the rigorous accident investigation that was, of course, carried out. Other workers reported that the driver from time to time had taken it upon himself to see how quickly he could negotiate the road and on this occasion he unexpectedly came upon an upcoming truck on a blind corner. His attempt to avoid a collision (on the dirt surface) led to a skid into the wing of the truck and he was then deflected over the small berm along the edge of the road and into a gully about two or three hundred metres below. Seat belts could not save the occupants. There were, of course, funerals to attend, grieving families, and company procedures to deal with. In my experience Shell treated safety matters with the utmost seriousness and professionalism. As it was, David Turner, President of Shell Chile, was obliged to personally visit Shell’s London office to give a full account of the accident, for which he and his organization were held responsible.

 

The effect of the loss of two of the project team was felt very deeply indeed. However work had to continue. Slowly the exploration function was being superceded by personnel more experienced in mine development and operation.

 

A huge variety of work was ongoing in January, in spite of bad weather that included electrical storms and up to 17 mm of precipitation per day. The storms prompted us to install lightening conductors! Reconnaissance for a suitable source of groundwater was started together with consulting hydrologist Gerardo Diaz. A contract was let to further extend the camp for the ever growing number of personnel. A bulldozer arrived on site to open yet more drill roads and proposals were invited for the drilling itself. The final results were received from the bulk samples taken from the pits and they indicated gold grades slightly better than those obtained from the equivalent drill holes, although silver grades were slightly poorer.

A quote was requested for geotechnical consultants to examine sites for mine dumps, the processing plant, road improvements and a possible airstrip. The metallurgical test work also moved forwards. Bottle tests were ready to start on site where seven column-leaching tests were in progress, and over 30 tonnes of ore was ready to load onto a pilot heap, with an additional 370 tonnes needed. A site for the pilot heap was chosen, a waterproof plastic membrane was ordered for its base, and filters, a Merrill-Crowe precipitation unit, tanks and sprinklers were ordered or received. On the corporate side, there was a dinner with Citibank personnel, site visits were received from John Prochnau, John Royall and Andy Meldrum of Westfield Minerals (Andy was accompanied by David Whitehead) and from Alfredo Cruzat, Nacho Silva and Renan Argandona of Coeur d’Alene Mines. Visits were booked in for Amex and Amax and more data were sent to Placer Development. There was some difficulty controlling the activities of Promel.

 

In February there were significant developments in terms of personnel. David Laing from Billiton in The Hague visited the project and an older colleague, Huib Vegter, came on a temporary basis to get an overview of the mining and logistical environment. It was decided to transfer Jack Harwood, a Billiton Group project engineer, from South Africa to oversee the preparation of the feasibility study, and he visited Choquelimpie with Colin Chapman, head of mining, from The Hague. Harwood took representatives from Davy McKee, Mountain States and Bechtel project engineering companies on a site visit in preparation for them presenting bids for the feasibility study. The planned visits by Amex and Amax also took place. In Arica a new administration assistant was appointed and advertisements were placed for mechanics and medical attendants.

 

Activities on site included the start of the new camp extension, and of geotechnical work. An environmental consultant, Roberto Lastrico, visited the site to plan a stream sediment and water quality survey. An evaluation of the first three months of meteorological data showed the lowest temperature registered was minus 7.5°C.

 

There were developments too with regard to infrastructure. A contract was let to Entel for a VHF ’phone system to link Choquelimpie with the Arica and Santiago offices and a second generator was ordered. More reverse circulation drilling was contracted and a programme of 900 metres of diamond drilling, to begin in March, was let. Rock quality design (RQD) measurements were taken to help gauge the likely stability of the rock benches in the mine. Further measurements of rock densities and check assay work was carried out. I collated all the information on sampling that we had carried out of outlying potentially mineralised alteration zones and old mine workings in the Choquelimpie area and delivered a report to the new project staff. There were continuing difficulties with Promel, who were making use of our drill roads to access new areas in the deposit, making it urgent to define a perimeter for their operations.

On the metallurgical front, a D-6 bulldozer prepared the site for the pilot heap leach and Enrique Carretero set off on a study visit to various American gold and silver mines with cyanide-leach processing plants to examine their operations and to talk to the operating engineers.

 

February 27th marked the closing date for offers from third parties to participate in ownership of a mining project at Choquelimpie and three submittals were received, including from Citibank and Westfield Minerals.

 

The rising tempo of external influence continued during March 1987. David Whitehead spent most of the month in Chile and, based on a conceptual study for the project, Huib Vegter drafted invitations to bid for a full feasibility study (FS) and engineering/procurement/construction contract (EPCC). David Laing transferred to Chile in April to become project Mining Engineer.

 

On March 28th Jan Slechte, Shell’s Head of Metals, visited Choquelimpie with David Whitehead, and I took photos of them trying out their golf driving abilities in the thin air of the Altiplano. David Turner, too, was feeling the need to gain a better understanding of everything that was going on and asked me to provide him with an explanation of all the different ore reserve estimates that had been made, and wanted to know why they kept changing! He was also involved in discussions with David Whitehead and me about the partnership proposals we had received and at this time a view began to develop that the company had offered too much when the option deals were signed for both Choquelimpie and Collahuasi. I was also busy reviewing the bulk sampling results, and the Cesmec laboratory check-sampling analyses from Copiapo, which had come up with some inconsistencies. A further visit to Choquelimpie with the estimable Jozsef Ambrus took place in mid-month.

 

It was at this time that a study on the effects of high altitude on health and safety was started. Soon afterwards Shell Chile got involved with other mining companies that were working at high altitude in Chile and they agreed to fund a research project at one of the universities in Santiago that developed considerable expertise in the physiological effects of altitude on the ability of the human body to work in such an environment. This was one of the pleasing spin-offs that came out of the Choquelimpie project[2a]. About that time too, we received proposals for an environmental baseline study.

 

On site, camp expansion was ongoing, bulldozing of new drill platforms commenced, and the diamond drilling programme of six holes to obtain continuous samples from deep in the deposit was started. The metallurgists split the deposit into ten zones for testing, the pilot heap site was prepared and the remaining 370 tonnes of ore obtained. A large column, six metres high by 0.5 metres diameter, arrived on site. Reconnaissance was carried out of four possible sites identified for a treatment plant.

 

My knowledge of the development of the project from about this time on becomes much sketchier, because it had essentially been transferred to the incoming staff and the engineering functions, all working under the direction of David Whitehead, now resident in Chile.

 

Heinz Groepper, an old friend from exploration in the Pyrite Belt of Spain, arrived with his family in Chile on April 26th; he was to take over as Senior Project Geologist. In May Marcial Maturana was contracted as Project Geologist. It was at this time too that Shell Chile deemed it necessary to involve the company’s ancillary personnel and Flavio Traverso (Public Relations) and Raul Castillo (Human Resources) – who to me had seemed bent on damaging the project during the early days of the exploration programme – made a site visit.

 

My own involvement was restricted to a visit with personnel from Anglo-American, and a reconnaissance visit (on horseback!) with geologist Pablo Uribe, to the neighbouring volcanic centre of Ajoya. Andy Meldrum and Peter McAleer of Westfield Minerals also made a return visit.

 

The feasibility study was contracted on 30th April to Fluor Engineering of the United States, co-ordinated by Jack Harwood, who had taken over from Huib Vegter. On May 13th the crushing/screening concepts and process design criteria were agreed, based on an anticipated throughput of one million tonnes per annum.

 

In June, the organisation, through lawyer Pilar Oyarzun, was in consultations with the local landowner, an Aymara lady called Clara Blanco, to explain the environmental, mining and many other implications of the project. By the end of the month the diamond drilling and fourth reverse-circulation drilling programmes had been concluded, now supervised by the project staff, and David Laing coordinated a meeting on the ore reserves, in which Heinz and I took part. Based on 128 RCH holes and six diamond drill holes the new estimate for the reserves was 8.3 million tonnes of oxide ore with an average grade of 2.08 grams per tonne of gold and 78 grams per tonne of silver, using an in-situ rock density of 2.2 g/cc. Another addition to the project staff was Eduardo Magri, a Chilean who had spent many years working with Daniel Krigge, the inventor of a statistical treatment for ore-reserve estimation that came to be known as ‘kriging’, in South Africa. An overall project manager for the hoped-for production phase of the project was also identified, Eduardo Alvear, a tough, practical man.

Also in June the feasibility study was completed. It comprised sixteen chapters in three volumes and considered all aspects of the project, including: a review of legal title to the property; geology and ore reserve estimation; mining plan; metallurgy and process plant; infrastructure; personnel; transport; health, safety and the environment; project implementation (EPCM); estimated capital and operating costs; economic evaluation. The initial production rate was projected as 1 million tpa of ore to produce 60,000 oz of gold-equivalent per year. Production for 1989 was to be raised to 1.5 million tpa of ore to yield about 100,000 oz of gold-equivalent.

It was at this time that drilling for groundwater to supply a potential mine and treatment plant was started, under my supervision, near the road from the River Lauca into the volcanic edifice that was Choquelimpie.

 

A problem occurred on site when the waterproof liner of the pilot heap leach was ruptured, but the metallurgical test work nevertheless reached a minor milestone on June 16th when the first gram of doré bullion was produced from the project.

 

A more significant milestone was reached on the last day of June when an agreement was signed with Westfield Minerals to farm in to the project, which immediately caused a storm of protest from Citibank.

 

At the time various foreign banks, including Citibank, were trying to extricate themselves from a crisis of poorly performing loans in Chile and were anxious to carry out swaps of their own debt instruments for equity in mining and other projects. Citibank saw Choquelimpie as a test case, partly because they felt comfortable ‘getting in bed’ with Shell, a company they felt had similar ethical values and management style to themselves[3]. When Citibank learned that their proposal had been passed over in favour of Westfield, they were very disappointed and I understand that John Reid, the bank’s Chief Executive, intervened personally at a very high level in Shell. The upshot was that the Westfield share of the project was diluted – to their great disappointment – to make room for participation by Citibank, who signed on the dotted line on July 14th. The final shareholdings were 42% for Shell Chile, 35 % for Westfield, and 23 % for Citibank.

 

From Shell Chile’s point of view it was a good deal because Citibank were content to accept substantially less advantageous terms than had been negotiated with Westfield. In essence, the money brought in to the project by Westfield and Citibank pretty much repaid Shell/Billiton for its outlay on the project and provided substantial de-risking, thus compensating for what by then was viewed as an over-generous option purchase price. Based on the position attained by Shell Chile a proposal was made to the Shell Group board for financing to place Choquelimpie into production, with participation by Westfield and Citibank, and this was accepted and signed by Mr. Van Engelshoven, the managing director, on July 17th. Formal approval by the Committee of Managing Directors of the Group was given at their meeting on July 27th. The new company that was established by the three shareholders was called Sociedad Contractual Minera Vilacollo Limitada (SCMV), usually referred to as ‘Vilacollo’.

Work on site in July included condemnation drilling of the proposed sites for the treatment plant and mine dump areas, to ensure that they was not underlain by any mineralisation. To the end of July the total of all drilling, including five condemnation holes, was 18,049 metres. Preparation of the site for the treatment plant was begun by bulldozing, and drilling of the first water well started on July 15th.

 

For me, personally, a notable event at Choquelimpie took place on September 17th when I was permitted to take my family on a site visit, and there are photos to record the event. More significantly for the project, a major milestone was reached on October 1st when Vilacollo purchased Choquelimpie from Promel for US$ 15 millions. The price was paid in Chilean Pesos and was approximately $3,405,000,000; it was hard enough getting the figures to fit onto the cheque, but even more so writing the amount in words! Purchase of the property had the immediate beneficial effect of ending Promel’s mining activities at the deposit. For me it was a huge relief that the trucks no longer rolled. One of the first visitors after acquisition of the project was Gordon Richards, who had a senior position at Shell in the minerals sector. I first met Gordon when I was a raw field geologist in 1969 and we both worked for Rio Tinto. He had made a point of taking a few minutes out on a visit to our project at Udny in Aberdeenshire to have a chat with me and I found him to be quite inspirational. It was good to see him again some eighteen year on as we were about to begin construction of a new mine.

Although most of my time was now spent on other projects, my involvement at Choquelimpie continued to a degree. I was able to visit outlying prospects with Heinz and together we worked on a geological model and other work on the reserves at the deposit. Under Waldo Cuadra, who was now free of his duties at Choquelimpie, we had been developing an exploration programme for other epithermal mineral deposits in the First Region, and we benefited from a visit by Nigel Grant, an excellent geologist with an academic background who was based in The Hague. Tragically, some years later, when living in Chile, Nigel was killed in a vehicle accident in Santiago. I also still had responsibility for the groundwater exploration programme, for which the drilling of a second well had started.

 

Towards the end of 1987 work on the geological model and distribution of ore reserves, in which I was participating, was continuing under the direction of Eduardo Magri. The technique involved generation of cross sections of the deposit and transfer of the data on to a series of level plans. The water supply needed for the mine was 20 litres per second and the first water well tested at only 2 litres per second. A second well was being drilled using a churn drill, but progress was slow and early in 1988 the water-drilling company was changed, to SAACOL.

 

The last quarter of 1987 must have been extremely busy in terms of design, procurement of equipment and construction, both on the site of the processing plant and at the orebody. From this time on the story is one that I cannot tell from personal experience because it was out of my hands, but some pointers emerge from company and published reports to which I had access.

 

1988

In February 1988 Citibank completed the first Chilean debt-for-equity swap, using its own debt, by raising US$8.2 million for Choquelimpie; I believe that it was also the first such swap that Citibank had completed anywhere in the world and, though modest in scale, was therefore important for them. They later carried out larger swaps to purchase participation in a forestry complex near Constitucion and in a cellulose pulp project near Colcura and Rucumanque, both owned by Shell, in southern Chile. A fourth project, with other companies, was also involved in forestry, making compressed wood products. In essence Citibank was exchanging poorly-performing loans that they had made in Chile for equity participation in projects that might produce future profits. The swap of ‘debt’ (loans) for ‘equity’ (shareholdings) allowed them to avoid having to write-off much of the loan portfolio involved, which helped them strengthen their balance sheet, so important for banks going through difficult times. By October Citibank had carried out debt-for-equity investments in Chile for US$126 million.

 

During the first part of 1988 Shell Chile contracted the services of an excellent Chilean petrographer, Alejandra Skewes, for mineralogical and fluid-inclusion studies of the Choquelimpie mineralisation, and supported a young geologist, Claudio Bisso, to carry out a mineralogical research project to help elucidate the geological history of the mineralisation. I also discussed with Eduardo Alvear recovery of field and other equipment from Vilacollo that actually belonged to Shell Chile.

 

During June the second and a third water wells were completed and deepening was started of the first well, to try and improve its yield. At the end of the month Westfield released a press announcement about its participation in Choquelimpie and the progress of the project. At that date, 120,000 tonnes of ore had already been mined and crushed in a hired mobile crushing plant and 33,100 tonnes with grades of 2.3 g/t gold and 102.8 g/t silver had been placed on the leach pads. July 15th was a major landmark for the project when the first gold-silver precipitate was actually produced. It was the first positive cash-flow, the moment that, after nineteen years, my efforts as an exploration geologist had begun to produce a tangible financial benefit for my employer!

 

Although the processing plant was being supplied with water from the wells that had been drilled, supply was not yet adequate and it was decided to drill two more wells, which was taking place in August.

 

The Quarterly Report for the period ended 30th September provides a summary of activity at that time. The project construction engineers were Fluor. In the nearby town of Putre, situated in a green area along a stream descending near the snow-covered peaks of Larancagua (also known as Nevados de Putre), a workers’ hotel that would house over 200 people was well advanced (144 places were completed and occupied). It came to be called ‘Hosteria Las Vicunas’ and would eventually provide facilities for tourists, another spin-off that would continue to benefit the region after the mine finally closed down. The workers were to travel by company bus from Putre up to the mine each day, which allowed them to sleep at a lower elevation. Initial ore production had already begun, with 262,722 tonnes containing 1.96 grams per tonne gold and 51 grams per tonne silver having passed through the hired crusher plant. Construction of the purpose-built crusher plant was in progress. Four leach pads were loaded with 141,390 tonnes to 5.5 m high. The heaps had stayed free of ice despite temperatures dropping to –10° C. The first doré metal from Choquelimpie was produced at the Johnson Matthey refinery near London during September.

 

By the end of October water well No. 4 had tested at a constant 25 litres/second, whereas well No. 1 had tested at seven litres per second only, although the water was emerging at ground level at a temperature of 30 degrees, due to the still-warm volcanic nature of the rocks.

 

The report to the end of November showed steady progress. All four pads had been reloaded with fresh ore, the leached ore from the first loadings having been transferred to a tailings area with a waterproof base where slow leaching of remaining gold and silver values would continue. Rather disturbingly, cracks had been found in two of the four asphalt leach pads, which might mean leakage of cyanide into the environment and loss of gold and silver values. The impermeable membranes beneath the pads were, however, intact and the pads were eventually repaired. Production for November was 2,802 troy ounces (oz.), of gold and 21,076 oz of silver. The average gold price received was US$422/oz, meaning gold receipts for the month of over US$1.1 million. Because the price available was considered to be beneficial the company was pursuing a strategy of forward sales, meaning that future production would be at a price good enough to keep the project profitable.

 

At the hotel in Putre 216 beds were operational, supported by kitchens, a self-service restaurant and dining room, and television and restrooms. Vilacollo arranged for extension of the national electricity grid to Putre, thus providing the town with a permanent electrical supply for the first time.

 

On November 10th the water supply was handed over to Vilacollo, effectively ending my responsibilities to the Choquelimpie project.

 

1989

By the end of March construction of the Choquelimpie mine and plant was essentially complete. The total estimated cost for construction was US$29.46 million and unit operating costs were US$12.68 per tonne of ore treated. Some test work by oxidative pressure leaching was initiated on sulphide mineralisation with a view to possible future exploitation.

 

Commissioning of the purpose-built crushing plant took place on March 7th and two days later the official opening of the operation took place on site. The attendees included: the Chilean Minister of Mines and the Governor of the First Region; Mr. Van Engelshoven of Shell, London; Messrs. Meldrum and McAleer from Westfield with their Chilean lawyer, Laura Novoa; Edward Dreyfus, Lucho Baertl and others from Citibank; David Turner, David Whitehead, Colin Chapman, and various others, including Rod Stead (Finance) and Crisologo Bustos (Legal) from Shell/Billiton. As a precaution, Dr. Rodrigues of Shell Chile was in attendance perchance any of the important visitors might be taken ill by altitude sickness.

 

No representatives were invited from the Exploration Department of Shell Chile, the people who had initiated the project and quickly moved it forward to the stage where it became evident that it could support a full-scale profitable mining project. I found this remarkable. No mining project in Chile had ever been moved from exploration into production as fast as Choquelimpie, pushed as we were by the terms of the option to buy the property and by the depredations inflicted upon it by Promel. From signature of the option agreement to purchase of the property had taken only 21 months and production began only 9½ months later, less than 31 months from the date of the option. Remember too that everything was taking place at about 4,800 metres above sea-level and that Choquelimpie was the highest gold or silver mine in the world.

 

I felt a sense of betrayal at the neglect and, back in Santiago, I simply decreed a one-day holiday for the whole unit! I also wrote a poem, called 'Choquelimpie' to express my feelings and presented a copy of it to David Whitehead. When David heard of my action I think he realized that the organization had blundered, for he quickly authorized the holiday and allowed us money for cream cakes and excellent Chilean sparkling wine as an acknowledgement of our contribution.

A further ceremony, called a ‘dedication’, took place during an official visit by the head of the Shell Group on March 20th. By the end of the First Quarter of 1989 the operation was running well. Ore reserves had risen to 9.8 million tonnes. Ore loaded on the pads in the period was 278,000 tonnes at 2.32 g/t gold and 58.4 g/t silver and precipitate containing 15,200 oz. of gold and 84,916 oz. silver had been produced. Although the final cost estimate for the project was US$29.46 millions, a little more than budgeted, the plant capacity was 50% more than design. The whole project was reviewed in a technical audit the following November and I believe that my last visit to Choquelimpie took place with Andy Meldrum on 23rd and 24th November 1989.

 

By the end of the year the Choquelimpie mine had produced profits of US$13 million, paid dividends of US$4 million and produced 89,380 oz of gold (6% over target) and 619,700 oz of silver (58% below target), which was considered as 100,000 oz of gold-equivalent. It may be noted that recovery of silver values never reached the levels that had been projected and, though I do not know why, I understand that the mineralogy of the ore may have been responsible.

 

My line responsibility for Choquelimpie had ended but I wasn’t entirely free of it. For one thing, it had been agreed to produce a scientific geological report of the deposit as a contribution to a special edition of the prestigious American magazine, ‘Economic Geology’. The special edition was being co-ordinated by Dick Sillitoe, who had been fundamental to the initial appraisal of the deposit by Shell Chile. I was asked to co-ordinate the article, to be written jointly by staff of Vilacollo and Shell Chile. As I was the only native English speaker among the seven eventual authors, in practice I had a very large role and ultimate responsibility for meeting deadlines, arranging illustrations and checking and editing the proofs. The article was published in 1991[4]. Among the interesting information it contains is an estimate for historical production, up to the start of involvement by Shell Chile, of 48,225 ounces of gold and 6.43 million ounces of silver.

 

I was also still involved in an epithermal exploration programme for Shell Chile in the First Region, and we had exciting prospects, especially at Padre Jiguata and Vilanunumani. In the end we were frustrated by environmental restrictions, and the good surface evidence we found, including anomalous gold and silver values, has never, so far as I am aware, been tested. Interest in exploring the area around Choquelimpie continues, however, in spite of the difficulties[5].

 

There is reason to believe that my protest at exclusion of any representative of the Shell Chile Exploration Department at the official opening of the mine must have struck home somewhere with someone. A Shell Chile annual dinner was held at the Country Club in Santiago on December 28th 1989 and during a review of the year’s activities by the company president, David Turner, I was greatly surprised to hear kind words of recognition of the Exploration Department’s achievements at Choquelimpie, with particular generosity in regard to my own contribution. I felt a fierce vindication of the position I had taken, and of the poem I had written at the time. It was at this dinner that Waldo Cuadra and I were presented with small commemorative gold and silver ingots of metal produced from Choquelimpie.

 

1990

David Whitehead was a good and capable boss[6]. Early in 1990 he gave to me a small bag containing some of the silver, in shaving-like form, that had been produced from the Choquelimpie pilot heap leach. I felt that there were a number of people who had played key, but little-recognized, roles in the development of Choquelimpie, and who had made the success of the project possible. I therefore had fourteen small silver ingots made up at a jewellers and engraved ‘Choquelimpie’ and on March 6th sent them as mementos to the following people:

 

  • Dick Sillitoe, for his critical contribution during the reconnaissance phase of the project.
  • Jozsef Ambrus, for the invaluable support he gave to the exploration team, and for helping establish the credibility of the project during the earlier phases.
  • Peter Verwoerd, for helping pilot approval of the option with Promel through Billiton in The Hague.
  • Ken McKechnie for a similar role to that of Peter Verwoerd.
  • Chris Pointon, who sponsored the initial visit and arranged for Shell Chile to sample the property.
  • Vicente Irrarrazaval, for his participation in the original reconnaissance with Arturo Thomas and Waldo Cuadra, and for support in The Hague, to where he was later seconded.
  • Pilar Oyarzun, for her excellent legal contribution, for being a superb team member, for aiding in negotiations, and for moral support when times were tough.
  • Jorge Salvatierra, Manager of Fuels in Shell Chile, the only person who had the generosity to congratulate me when the option contract was signed on 27th December 1985, an event in which he participated.
  • Nurie del Valle, the inestimable Secretary of Metals Division, who was a rock throughout the whole project.
  • Roberto Freraut, a most able geologist and an unsung hero from the extremely difficult exploration phase of the project.
  • Osvald Ponce, another invaluable member of the geological team during the exploration phase.
  • Alejandro Faunes, the third member of the geological team during the exploration phase.
  • Glen Burns, the fourth member of the geological team during the exploration phase.
  • Claudio Rodriguez, a mining technician who had born much of the brunt of the exploration phase.

 

Technical Description of the Project

There follows a short technical description of the project, mostly taken from an article published in Mining Magazine in November 1991[7].

 

In 1990 the mine produced 100,692 oz of gold and 664,293 oz of silver at an operating cost of US$246 per ounce. Since the start of production the project had yielded over 225,000 oz of gold and over 1.5 million oz of silver.

 

Mining was by conventional open-pit methods, the final dimensions of the three pits at the deposit were expected to be 500 by 300 by 125 metres for the Main Pit, 250 by 150 by 50 metres for the Vizcachas pit and 280 by 110 by 80 metres for the Suri pit. Mining was carried out by a contractor and the expected final stripping ratio (waste:ore) was 1:1. Blasthole drilling of 90 or 100 mm diameter holes was achieved by two down-the-hole Tamrock hydraulic drills on 5 m benches.

 

Loading and hauling was carried out by a fleet of five CAT 988-B wheel loaders with 9.2 m³ capacity buckets teamed with twelve CAT D-400 articulated six-wheel drive trucks with a 40 t payload capacity. Ancillary equipment included three CAT D8s and one rubber tired CAT 824, two CAT 14-G graders, two water tank trucks and one diesel tank truck. A computerized block modelling system was used for mine planning.

 

Ore was fed to a 43 by 52 inch Nordberg jaw crusher at a rate of 600 t per hour. The run-of-mine ore was crushed to less than five inches in open circuit and conveyed to a 5,000 t coarse ore stockpile. Throughput was about 4,500 t per day, or 1.5 million tonnes per year.

Two belt feeders below the coarse ore stockpile fed conveyors which in turn fed two 8 ft by 20 ft double deck screens. The top deck was equipped with 2¼ inch aperture screen sections. Tramp iron was removed by magnets.

 

Undersize material (less than 1 inch) was conveyed to a 100 t capacity fine ore bin. Oversize was fed to two 54 inch El Jay roller cone crushers in closed circuit with screens; use of the El Jay crushers eliminated the need for tertiary crushers and was considered innovative. The secondary crushing circuit discharged a product that was 100% passing 2 inches. This circuit operated at a rate of 600 t per hour during 15 hours per day.

 

The minus 1 inch material was conveyed to the agglomerator by a variable speed conveyor and minus ⅛ inch pebble lime was then added at a rate of 2kg/t. Sodium cyanide was added at the agglomerator feed end at a rate of 0.4 kg/t. Barren solution was added to bring the moisture content to about 12%. The agglomerated product was conveyed through a stacker to a 30,000 t capacity stockpile. Curing time for the agglomerate was 48 hours.

 

Ore from the agglomerate stockpile was hauled to the leach pads by truck and top loaded to produce a 6m lift height. Four contiguous reusable leaching pads were constructed with an asphalt layer above a carefully compacted sub-base of screened fines. A layer of 0.5m of leached ore was placed above the asphalt to provide protection and 3 inch diameter perforated piping was added to aid in removing solution from the heaps.

 

In 1991 the four leaching pads were used as one heap with a length of 208 m, a width of 130 m and a 5 m height. The pad was loaded and unloaded at a rate of 6,700 t per day.

 

Leach solution of pH 10-11 containing 1.2 to 1.5 g/l of cyanide was applied to the heap at a rate of 10 litres per hour per m² for a total active application period of 30 days. Wobbler sprinklers marketed by Senninger Irrigation Inc. of Orlando, Florida, were used during the spring and summer for applying solution in a pattern to ensure maximum coverage and minimum evaporation. Drippers, also called pressure emitters, were used during the autumn and winter. This method of irrigation did not make a significant amount of ice and there was minimal evaporation of solution and washing of the fines into the pores of the heap. The drip irrigation system allowed the mine to maintain production through the cold season.

The resultant pregnant solution was collected in a central drain trench located at the toe of the heap and transported by gravity to the 8,000 m³ capacity pregnant solution pond.

 

From the pregnant solution pond the solution was pumped to two clarification filters yielding a solids-free pregnant solution.

 

The clarified pregnant solution was then pumped to a packed vacuum de-areation tower for removal of dissolved oxygen prior to using zinc for the precipitation of the gold and silver values. Typical de-areated solution contained 0.5 ppm dissolved oxygen.

 

Precipitation of the metal values was accomplished using the Merrill-Crowe process. Homogenized zinc dust slurry was added to the de-areated solution in the filter press feed pump. The resultant solution was then pumped to two recessed plate and frame type filter presses for removal of the precipitated values of gold and silver.

Until the end of 1990 the precipitate was heated in a retort to dry it and remove mercury, then assayed, sealed in drums and sold for smelting. Thereafter a furnace was installed. The precipitate filter cake, typically containing approximately 8.7% gold and 56.5% silver, was fluxed with anhydrous borax and soda ash. The mixture was then charged to an electrical melting furnace and heated to approximately 1,200°C. The melting rate was approximately 35 kg per hour of precipitates.

 

Doré bullion was poured from the furnace into cast iron pots to yield bars of 500-600 troy oz size. The doré typically contained 15% gold and 82 % silver. It was escorted to Arica and dispatched by air.

 

Subsequent Activity

As an oxide gold/silver proposition, Choquelimpie was not a large deposit and Vilacollo was unsuccessful in finding significant reserves over and above those that were demonstrated during the exploration phase. This despite taking the total amount of drilling up to 100,000 metres (SAGC data – see below)[8]. According to a Billiton company magazine of February 1994, the mine ceased production in November 1992. Total production over the four years of mine life was given as 360,000 ounces of gold and 2,345,000 ounces of silver from 7 million tonnes of ore. The article was pleased to note that the operation had received an award from the national Agency for Geology and Mining for excellent safety performance.

 

A statement issued on the internet in about 1995 by a company called KCA noted that decommissioning of the mine had taken place over a two year period, during which the spent tailings were re-leached to remove traces of cyanide that might have had deleterious effects had they escaped into the environment. In the process over 30,000 further ounces of gold had been recovered. Overall, therefore, it can be estimated that on average 1.73 grams of gold and only about 10.42 grams of silver were recovered per tonne of ore treated.

 

In about 1990 Westfield was taken over by Northgate Exploration Ltd. who on 22nd April 1996 announced the sale of its interest in the Choquelimpie property to its joint venture partners for US$ 1 million plus a net smelter royalty[9].

 

On September 3rd 1998 a company called South American Gold and Copper Co. Ltd. (SAGC) signed a Letter of Intent with Villacollo for further work at Choquelimpie. It stated that from 1987 to 1992 the venture ‘led by Shell mined and leached 7.7 million tons (equivalent to about 7 million tonnes) of oxide ore which produced some 398,904 oz of gold and 2,192,062 oz of silver before operations ceased in 1992’[10]. After 1992 Vilacollo was sold, the major new shareholders being the Browne Koester Group and Ingenieria y Construcciones Mas Errazuriz. During the period 1996 to 1998 SAGC/Vilacollo, led by Dr. Dave Thomson, one of the discoverers of the El Indio mine, focussed their attention on the sulphide mineralisation underlying the open pit. They detected zones of enrichment within breccia bodies that were 9 to 15 metres wide with grades of the order of 5 grams per ton gold equivalent, and locally higher grades. A shaft, 12 metres deep, was sunk in the Suri pit where the highest grade oxide was known to occur and encountered high grade sulphide ore (with pyrite and enargite). Two hundred and eighty metres of drilling and cross-cutting from the shaft gave an average of 13.92 g/t Au, 72.1 g/t Ag and 2.04% Cu, or 18.95 g/t gold equivalent over an average width of 6.4 m and a length exceeding 70 metres along a 330° break. There was evidence that the zone might extend another 74 metres and a parallel mineralised body was also detected. Parallels were drawn with El Indio, Cerro de Pasco and other well-known enargite-rich gold mines, where mineralisation was found to extend to depths of more than 500 metres. Potential for 8.9 million tons of ore at 5 g/t gold equivalent were envisaged to a depth of 200 metres.

 

Work continued at Choquelimpie, apparently by SAGC, up to the end of 2003 but it appears that results had been disappointing. It was reported that a plan to excavate and sample 18 km of tunnels was under consideration.

 

The Legacy of the Choquelimpie mine

Economic activity almost always leaves something of value, even though detractors may try to maintain the contrary. Admittedly, digging the top off a hill that has stood for millions of years, reducing it to rubble and extracting a few tonnes of metal to languish in vaults or adorn the human body may easily be seen as a pointless exercise.

 

But Choquelimpie fomented expertise in mineral exploration, project implementation, and technical competence and innovation. This expertise has subsequently been taken to many other Chilean mining projects, such as Collahuasi, that continue to support the world’s demand for metals and more comfortable and fulfilling lives.

 

Choquelimpie also provided wages and salaries for many people over a number of years and profits to pay taxes and finance pensions, savings and investments elsewhere. The additional quantities of gold it contributed to monetary reserves helped support soundly-based economic activity through the multiplier effect.

 

The financial arrangements put in place for Choquelimpie were very innovative, principally because they allowed Citibank and the Chilean government to develop a method to re-cycle poorly performing loans into new productive ventures. Choquelimpie was the first debt-for equity swap conducted by Citibank using its own debt, and it subsequently went on to invest a total of at least US$150 million, possibly as much as US$300 million, in such swaps in Chile. I understand that other banks (‘Manny Hanny with the Funny Money’?) carried out similar transactions, all of which helped support the Chilean economy in the ways described above for Choquelimpie.

 

Choquelimpie also helped build and support the pride of Chileans, and others, in their own competence and provided a series of positive news stories. Not least among these was that of the visit of the Princess Royal, Princess Anne, to the operation early in 1992[11]. She stayed at the Hosteria Las Vicunas in Putre where she was welcomed by Rod Stead of Shell Chile and Andreas Hevia, the then general manager of Vilacollo (who had succeeded Eduardo Alvear). From Putre she visited the breathtaking area of Lake Chungara before going to the mine at Cerro Choquelimpie where she was received by the mine management team and shown round by Jan Akkerman, a Billiton geologist who was then the Mine Manager. Clara Blanco presented Princess Anne with a stole she had woven from the wool of her alpacas and the company gave the Princess a small sample bar of gold and silver produced at the mine.

 

After the mine closed, other more tangible benefits remained. As a result of its operation Choquelimpie permitted extension of the asphalt road to Putre and on to the frontier with Bolivia, and electrification of Putre via a powerline from Chaqpiquina. The Hosteria Las Vicunas had been designed to survive the mine and serve as a tourist facility and it now supports eco-tourism to Lake Chungara, the Vicunas Nature Reserve and the spectacular ice-covered peaks of Sajama, Larancagua, the Payachatas and the Quimsachatas. Other attractions that are now within a convenient range for tourists are the River Lauca and Salar de Surire, habitat of the Altiplano flamingos[12].

 

In Putre the British Council supported the local school, not least by the introduction of computing in what had previously been a very isolated village.

 

Finally, in Santiago the Choquelimpie partners were instrumental in supporting, together with several other mining companies with high-altitude operations, research into the physiology of the body in such stressful conditions.

Written by: Philip Dunkerley

 

This page was last modified on 19 November 2009

 

 

Footnotes and References

[1] ‘Revista de Domingo’, 20th May 1990, p. 6.

[2] Pilar has subsequently risen to national and international prominence for successfully taking a case of sex discrimination to Chile’s Supreme Court. See http://www.elperiodista.cl/newtenberg/1534/printer-56223.html.

[3] See ‘El Mercurio’, 8th October 1989, interview with Ted Dreyfus, then manager of Citibank in Chile.

[2a] For an astonishingly well-written personal description of the difficulties that may be experienced working at high-altitude (at Collahuasi), see Chapter 8 of James ('Jim') Platt's fascinating book 'Your Reserves or Mine?', (2004, Creighton Books, ISBN 90 807808 2 0, available via Amazon Books). Jim also explains the difficulties experienced by technical personnel within the often-politicised bureaucracy of Shell at the time that Choquelimpie was under development.

[4] Groepper, H., et al., 1991, ‘The Epithermal Gold-Silver Deposit of Choquelimpie, Northern Chile’, Econ. Geol., Vol. 86, pp. 1206-1221.

See also Cuadra W. A. and P. M. Dunkerley, ‘A History of Gold in Chile’, pp. 1155-1173 of the same volume.

[5] See, for example, http://www.forestethics.org/article.php?id=1883 dated 17th August 2007.

[6] See http://www.latituderesources.com/s/Management.asp; on April 16th 2008 he became Non-Executive Chairman of Latitude Resources.

[7] Choquelimpie – Chile’s third largest gold mine’, Mining Magazine, November 1991, pp. 292-293, published by Mining Journal Ltd., London.

[8] In an interview John Prochnau said: “Choquelimpie was a really interesting deposit. We've all heard prospectors claim, "There's a mountain of ore there!" Choquelimpie actually was a mountain of ore. Until Esquel, it was probably the most impressive surface occurrence I had ever seen. The original resource was about a million ounces, and I thought it would go on forever through additional discoveries. However, it just didn't get much beyond the original forecast.” (http://www.altoventures.com/i/pdf/KITCO_CASEY_EXPLORERS_LEAGUE_Interview_with_John_Prochnau2.pdf )[9] See http://findarticles.com/p/articles/mi_m0EIN/is_1996_April_22/ai_18216809

[10] See http://www.sagc.com/index/contenido/news/allnews/sep0398.htm

[11] Reported in ‘Billiton Magazine’, an in-house Billiton publication, April 1992, p. 5.

[12] See, for example, http://www.visitchile.com/eng/atacama-desert-altiplano/hotel.asp?id-hotel=PUT001[13] Image from www.visitchile.com/.../city-hotels.asp?id-city=4